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Restructuring
9 Months Ended
May 31, 2016
Restructuring [Abstract]  
Restructuring
Note 3. Restructuring
 
On April 8, 2015, the Walgreens Boots Alliance Board of Directors approved a plan to implement a new restructuring program (the “Cost Transformation Program”) as part of an initiative to reduce costs and increase operating efficiencies. The Cost Transformation Program implemented and built on the cost-reduction initiative previously announced by the Company on August 6, 2014 and included plans to close approximately 200 stores across the U.S.; reorganize corporate and field operations; drive operating efficiencies; and streamline information technology and other functions. The actions under the Cost Transformation Program focus primarily on Retail Pharmacy USA segment, but includes activities from all segments and are expected to be substantially complete by the end of the Company’s 2017 fiscal year. The Company estimates that it will recognize cumulative pre-tax charges to its GAAP financial results of between $1.6 billion and $1.8 billion, including costs associated with lease obligations and other real estate payments, asset impairments and employee termination and other business transition and exit costs. The Company expects to incur pre-tax charges of between $525 million and $600 million for real estate costs, including lease obligations (net of estimated sublease income); between $650 million and $725 million for asset impairment charges relating primarily to asset write-offs from store closures, information technology, inventory and other non-operational real estate asset write-offs; and between $425 million and $475 million for employee severance and other business transition and exit costs. The Company incurred pre-tax charges of $73 million and $191 million related to the Cost Transformation Program during the three and nine months ended May 31, 2016. The Company incurred pre-tax charges of $160 million related to the Cost Transformation Program in the three and nine months ended May 31, 2015. From inception through May 31, 2016, the Company incurred pre-tax charges of $733 million ($296 million related to asset impairment charges, $254 million in real estate costs and $183 million in severance and other business transition and exit costs) related to the Cost Transformation Program. All charges related to the Cost Transformation Program have been recorded within selling, general and administrative expenses. As the program is implemented, the restructuring charges will be recognized as the costs are incurred over time in accordance with GAAP.

In March 2014, the Walgreens Board of Directors approved a plan to close underperforming stores in efforts to optimize and focus resources within the Retail Pharmacy USA segment in a manner intended to increase stockholder value. As of August 31, 2015, this plan was completed and no additional charges related to the plan are expected. There were no charges incurred in the three month period ended May 31, 2015. For the nine months ended May 31, 2015, the Company incurred pre-tax charges of $17 million, which were primarily related to lease termination costs. All charges related to this plan have been recorded within selling, general and administrative expenses.

Restructuring costs by segment are as follows (in millions):

  
Retail Pharmacy
       
Three Months Ended May 31, 2016
 
USA
  
International
  
Pharmaceutical
Wholesale
  
Consolidated
 
Real estate costs
 
$
-
  
$
-
  
$
-
  
$
-
 
Asset impairments
  
48
   
-
   
-
   
48
 
Severance and other business transition and exit costs
  
12
   
6
   
7
   
25
 
Total restructuring costs
 
$
60
  
$
6
  
$
7
  
$
73
 
 
Three Months Ended May 31, 2015
                
Real estate costs
 
$
24
  
$
-
  
$
-
  
$
24
 
Asset impairments
  
102
   
-
   
-
   
102
 
Severance and other business transition and exit costs
  
25
   
9
   
-
   
34
 
Total restructuring costs
 
$
151
  
$
9
  
$
-
  
$
160
 
 
  
Retail Pharmacy
       
Nine Months Ended May 31, 2016
 
USA
  
International
  
Pharmaceutical
Wholesale
  
Consolidated
 
Real estate costs
 
$
52
  
$
-
  
$
-
  
$
52
 
Asset impairments
  
73
   
-
   
-
   
73
 
Severance and other business transition and exit costs
  
45
   
14
   
7
   
66
 
Total restructuring costs
 
$
170
  
$
14
  
$
7
  
$
191
 
 
Nine Months Ended May 31, 2015
            
Real estate costs
 
$
41
  
$
-
  
$
-
  
$
41
 
Asset impairments
  
102
   
-
   
-
   
102
 
Severance and other business transition and exit costs
  
25
   
9
   
-
   
34
 
Total restructuring costs
 
$
168
  
$
9
  
$
-
  
$
177